People want convenience and automated teller machines (ATMs) have provided that convenience to people. People can utilize an ATM associated with their bank or with other banks provided they share a common network. People want access to their money as quickly as possible and ATMs provide such a service. If a person deposits a check from work into an ATM, the process for how long before the funds of a check are available is dictated by Title 12, Chapter 2, Part 229 of the U.S. Code. This statute commonly is referred to as Regulation CC. Regulation CC describes how long a financial entity, such as a bank, may place a hold on deposit items before making them available to a consumer.
The review and hold placement process for ATM deposits takes place in numerous ATM deposit services (ADS) sites which manually places holds on items based on fraud scrutiny and criteria. The process is a manually intensive procedure resulting in an inefficient process and at times is non-compliant with Regulation CC due to mistakes from a manual interpretation of a highly complex regulation. Liability Risk Management (LRM) establishes policies/business rules on which suspected fraudulent deposits should have a hold placed on them. Processing at an ADS unit may include in excess of 30 people of which 5 or more may be dedicated to the review and hold placement process.
The ADS unit processes the paper side of the ATM deposits by matching the deposited items with the ATM deposit automated processing (ADAP) system tickets that are generated from the customer's electronic ATM transaction. While the deposit transaction is electronically posted, the deposits are then scored and manually reviewed based on the depositing customer's risk score. This includes a check acceptability and negotiability review as well as fraud prevention. Then the ADAP ticket and the deposited items are processed through item processing for posting to a general ledger associated with a financial entity of the ATM.
Recent developments with image-enabled ATMs has resulted in fewer envelope-based deposits for the ADS sites to process. As the deposit process is transitioned to a Universal Landing Zone (ULZ) and associated systems, a hold review and placement process is still required. The ULZ performs data perfection processes to prepare image deposits for posting, balancing, codeline corrections, and image quality. Although image-enabled ATMs provide some additional expedited processing, the manual process associated with reviewing and hold placement processing still hinders financial entities and customers.
Gathered data has shown the error rate associated with manual holds to be approximately 15%. Considering the fact that liability for non-compliance with Regulation CC consists of up to $1,000 per transaction or $500,000 per class action suit, together with attorney's fees, an automated review and hold placement process is needed.